Kuwait plans to raise oil output to two million barrels per day within a week as the Strait of Hormuz reopens following an agreement between the US and Iran to end the war in the Middle East.
Opec’s fifth-largest producer has carried out essential repairs to damaged infrastructure to help the country regain production capacity faster than predicted, said Sheikh Nawaf Al Sabah, Kuwait Petroleum Corporation’s chief executive, Kuwait News Agency reported on Thursday.
“Prewar production levels could be restored within weeks once regular international commercial shipping to Kuwait ports has resumed,” Mr Al Sabah, who is also the deputy chairman of KPC, said.
The company is lifting force majeure notices issued during the war for a phased resumption of normal operations and production.
KPC is also offering Kuwait Export Crude grade for July delivery via a tender, with each cargo set at two million barrels, Reuters reported on Friday. Last week, KPC sold four million barrels of crude for June delivery via a tender.
Kuwait’s oil production collapsed as the Iran war blocked access to the Strait of Hormuz, a key route for global crude supplies. Output fell by 55 per cent to 1.16 million barrels per day in March, Opec data, based on secondary sources, shows. Output further plummeted to 573,000 barrels per day in May.
Unlike Saudi Arabia and the UAE, Kuwait lacks pipelines to bypass the waterway through which 20 per cent of the world's energy supply normally passes. The Gulf nation cut production to the level needed for local use and sold its refined products in the Gulf.
The country is looking to expand pipeline capacity with its neighbours and inviting foreign investment as part of plans to bypass the strait and continue exports, Sheikh Nawaf told an energy conference in Washington this month.
“It's tough for us to change our geography … the GCC states are working together better than we have in quite some time, and really looking at how to address these situations collectively,” he said.
Kuwait is in discussions with Saudi Arabia and the UAE to look at expanding the existing pipeline system to accommodate Kuwaiti oil, he added, without providing further details.
Saudi Arabia has the East-West crude pipeline, connecting Abqaiq in the east to Yanbu on the Red Sea for crude exports, while the UAE's pipeline runs from Habshan in Abu Dhabi to Fujairah. The UAE recently announced plans for a new pipeline to double its export capacity through Fujairah.
Kuwait came under heavy retaliatory attacks by Iran, which affected its energy infrastructure and other sites. The 346,000 bpd Mina Al Ahmadi refinery was attacked multiple times by drones, which caused fires at several units.
